Oil Spill Commission Issues Final Report
On January 11, the the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling formed after the explosion and spill in the Gulf of Mexico released its final report, calling for tougher regulation, stiffer fines and the strengthening of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), among a variety of recommendations. Find the report and other information about the commission at http://www.oilspillcommission.gov/ .
Some highlights of the report –
On the companies – “The immediate causes of the Macondo well blowout can be traced to a series of identifiable mistakes made by BP, Halliburton, and Transocean that reveal such systematic failures in risk management that they place in doubt the safety culture of the entire industry.”
On MMS – “MMS became an agency systematically lacking the resources, technical training, or experience in petroleum engineering that is absolutely critical to ensuring that offshore drilling is being conducted in a safe and responsible manner. For a regulatory agency to fall so short of its essential safety mission is inexcusable.”
Change to a risk-based regulatory approach in Europe – “The Norwegian government responded to the loss of the Alexander Kielland (1980 rig loss) y transforming its approach to industry operations. Under the new regime, rather than relying solely on prescribed operational and safety standards, the government required the industry to demonstrate thorough consideration of all risks associated with the structures and operations for a drilling or production plan. The regulator no longer “approved” operations. Shifting the burden of demonstrating safety to the operator, the regulator would instead now “consent” to development activity proceeding only upon the operator’s demonstration that sufficient safety and risk management systems were in place.
“All these foreign regulators—the United Kingdom, Norway, and Canada—had previously relied on the kind of prescriptive approach used in the United States, but in the aftermath of these fatal accidents in harsh, remote offshore environments, authorities elsewhere concluded that adding a risk-based approach was essential. They faulted reliance on the “prescriptive regulation with inspection model” for being fundamentally reactive and therefore incapable of driving continuous improvement in policies and practices.67 According to Magne Ognedal, the Director General of the Norwegian Petroleum Safety Authority, the prescription-only model engendered hostility between the parties and put the risk—legal and moral—onto the regulator to accommodate changing technology, geology, and location, rather than onto the operator, where the responsibility rightly belonged.68 Under the new safety-management model, minimum standards for structural and operational integrity (well control, prevention of fires and explosions, and worker safety) remained in place. But the burden now rested on industry to assess the risks associated with offshore activities and demonstrate that each facility had the policies, plans, and systems in place to manage those risks. In the United Kingdom, such risk management plans were called a “Safety Case.” ([69)
Regulator training – “In the absence of a clear statement from the top about the necessity for such expertise to ensure drilling safety, it should be no surprise that MMS personnel have suffered from the loss of essential expertise throughout their ranks. Indeed, the lack of requisite training is abysmal. According to a recent survey conducted at the request of the Secretary of the Interior, “[a]lmost half of the [MMS] inspectors surveyed do not believe they have received sufficient training.” (76)
Impact of safety research decline – “Decreasing safety-related research and development. Safely managing industrial hazards for oil and gas drilling requires experience and knowledge: knowing not only which actions to perform at various points on a checklist during a procedure, but also basic knowledge of the interactions of oil, gas, cement, drilling mud, sand, rock, and salt water that enables correct decisions when unexpected events occur. Yet such knowledge and experience within the industry may be decreasing. The chair of the University of Texas’s Department of Petroleum and Geosystems Engineering, Tad Patzek, testified before Congress in 2010 that “the oil and gas industry has eliminated most of its research capabilities, which three decades ago allowed it to rapidly expand deepwater production.”59 “Academic research has been important but small in scale and permanently starved of funding,” Patzek continued. “The depletion of industry research capabilities and the starvation of academia that educates the new industry leaders have resulted in a scarcity of experienced personnel that can grasp the complexity of offshore operations and make quick and correct decisions.”60 Nor, Patzek stressed, could industry depend upon contractors to fill the safety gap: “The individual contractors have different cultures and management structures, leading easily to conflicts of interest, confusion, lack of coordination, and severely slowed decision-making.”61* (229)